British lawmakers welcome Cameron after EU veto

British Prime Minister David Cameron received a hero's welcome from his party's lawmakers but faced searching questions Saturday over his veto of a new EU treaty to solve the eurozone crisis.

Cameron hosted a dinner for a number of Conservative MPs on Friday night at his country residence after he returned from a summit in Brussels where he took the historic step, his Downing Street office told AFP.

Cameron's veto torpedoed a planned treaty aimed at saving the eurozone, but the other 26 European Union states looked set to join a "new fiscal compact", proposed by France and Germany, to resolve the crisis, leaving Britain on its own.

Finance minister George Osborne dismissed suggestions that London would now lose influence within the EU, saying Cameron had to protect Britain's interests and especially its financial services industry.

"We have protected Britain's financial services and manufacturing companies, that need to be able to trade their products into Europe, from the development of eurozone integration spilling over and affecting non-euro members of the EU," Osborne told BBC Radio on Saturday.

"This is not about letting the City off regulation, this is about the right regulation for a very large financial centre, which is much, much larger than any financial centre in France or Germany or any other country of the EU."

Downing Street said there was a "pre-planned meeting" for Conservative lawmakers late Friday at Chequers, the prime minister's official country house west of London, but gave no further details.

Around 30 MPs at the dinner toasted Cameron, media reports said.

Leading eurosceptic MP Andrew Rosindell, who had urged Cameron in parliament last week to show "bulldog spirit" at the Brussels summit, was quoted by the BBC as saying the mood was "extremely positive".

But former Conservative cabinet minister Michael Heseltine, a key figure under Margaret Thatcher in the 1980s, warned eurosceptics that Britain should not walk away from the EU.

He said Cameron had to use the veto because of the political situation at home, where he would have been unable to get any treaty through parliament and could yet face demands for a referendum on Europe.

But he added: "In saying he wanted to protect the interests of the City, there is no way you can protect those interests by floating off into the Atlantic, frankly."

There were also tensions with some Liberal Democrats, the junior partners in the coalition government, warning that the veto could lead to a "two-speed" Europe with Britain on the outside.

"The EU leaves Britain", the Independent said in a headline, while the left-leaning Guardian said "Cameron cuts UK adrift" and accused him of acting not for the good of the economy but to appease eurosceptics.

The Financial Times and The Economist also criticised Cameron's decision, saying it could lead to the City of London losing business to eurozone rivals Frankfurt and Paris.

FT editor Lionel Barber said he had heard that the Liberal Democrats were telling their Conservative colleagues they would have to renegotiate with the EU.

"It's not clear to me that the prime minister has gained anything," Barber told the BBC.

"The problem now is we are completely on our own, so I believe that at some point in the next two or three months you'll find us back in the negotiating room."